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Pay transparency rules effective in January

Review policies and office posters

Pay transparency rules effective in January

In my previous blog, “People will talk …,” I discussed pending regulations implementing  Executive Order 13665. I have some new developments to share with you on the matter, which will require compliance next January. First, a quick recap. 

What’s happened

A major concern of the Obama Administration has been the inability of individuals to know if they are being discriminated against, on the basis of race or gender, in terms of pay levels compared to other workers.

Under Executive Order 13665, the Office of Federal Contract Compliance Programs published final regulations on Sept. 10, 2015, and the new rules will become effective on Jan. 11, 2016. 

The regulations modify Executive Order 11246, the directive requiring affirmative action by community banks with 50 or more employees. Therefore these new obligations also apply to organizations which serve as a depository of federal funds in any amount, are issuing or paying agents for savings bonds or notes, or maintain relationships with FDIC. That last coverage trigger obviously extends to the entire banking industry.

The new rule changes the equal opportunity clause which banks are expected to include in contracts, subcontracts, and purchase orders with a value of $10,000 or more annually. If banks incorporate the equal opportunity clause by reference, which is the most common course of action, then these regulators accept that approach as compliance with this new terminology. (“Incorporating by reference” means to adopt another document into another document by stating that in the new document.)

OFCCP will be updating the “EEO is the Law” poster or supplement, yet again, to reflect changes called for by this new Executive Order. While the new poster is being developed—and, as you know, that poster has not been updated to address several rounds of recent regulatory changes—banks may continue to use the existing poster (2009 version).

At some point in the future, the EEOC will update the “EEO is the Law” poster with changes contemplated by this new Executive Order, and banks will be expected to post the new version.

Updating the situation

OFCCP has now released an “EEO is the Law Supplement,” which is available on its website and is generally available from employment poster vendors. OFCCP now expects that banks will display the current “EEO is the Law” (November 2009 version), along with the supplement. 

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Now, some details you may not have been aware of.

The Executive Order requires that banks include a pay transparency provision, as drafted by OFCCP, in existing employee handbooks and personnel policies.

As an editorial comment, we find this new obligation stunning, because, to our knowledge, no other federal employment law, regulation, or order directs banks to include in employee handbooks language specifically written by a federal agency.

The Executive Order further expects that the nondiscrimination provision will also be posted where banks display their other federal and state employment posters, such as the “EEO is the Law” poster.

In terms of new prohibitions, the Executive Order prohibits banks from disciplining or discharging most applicants or employees for discussing or disclosing their own compensation or the compensation of others. Any performance standards requiring confidentiality around compensation information need to be withdrawn.

One caveat: The rule does contain an exception to this protection for individuals, such as human resource professionals, who have an essential job function to access and protect compensation and employee personnel information on behalf of the organization. In the case of those individuals, they are protected under the rule to the extent that they discuss their own compensation.

Steve Greene

Steve Greene is managing member at Helms & Greene, LLC.  He specializes in employment litigation, employee benefits issues, and compensation matters. Greene oversees employment litigation nationally, including discrimination, harassment, retaliation, ERISA, and breach of contract actions against employers. He has worked with major corporations on overtime exemption compliance and in design of compliant compensation methodologies. He has also assisted firms in managing Department of Labor and state regulatory investigations. He worked with Marian Exall, who recently retired from her authorship of “The Human Element.”

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